De Blasio admits rent laws have 'consequences'

A sign for the northwest oval is seen in Stuyvesant Town-Peter Cooper Village, Manhattan's largest apartment complex.

Mayor Bill de Blasio acknowledged Friday that the state's new rules on rents may come with costs of their own.

The comments came in response to reports by Crain's that private equity giant Blackstone had halted upgrades on rent-regulated apartments in Manhattan's sprawling Stuyvesant Town complex and by The Real Deal that the firm was deliberately leaving many of the units vacant. Blackstone's actions follow legislation passed in Albany earlier this year that limited property owners' ability to recover investment costs from rent-regulated tenants—legislation the mayor endorsed.

De Blasio, alluding to city subsidies that persuaded Blackstone to keep units at the complex rent-regulated, said the Crain's and Real Deal stories left him "very concerned."

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"No doubt, the law that passed in Albany had a lot of elements to it, and is having a variety of consequences," the mayor said. "We came to a deal to protect affordability at Stuy-Town—you know, bluntly, that in the previous administration that Stuy-Town was almost entirely privatized—we stopped that, and came to a deal to protect affordability long-term there. That, obviously, requires the apartments to be available to people."

Blackstone asserted that it has fully honored the terms of its 2015 contracts with the city, and that it is actively working to renovate and rent all empty stock at Stuyvesant Town.

Nonetheless, it conceded it was reconsidering certain planned expenditures due to the new rent laws.

“We have invested hundreds of thousands of dollars in capital improvements,” a spokeswoman said in a statement to Crain’s. “In light of the new legislation, unfortunately, we have to make some difficult choices.”

The mayor promised to have "serious conversations" with the company to ensure it is complying with the terms of its arrangements with the city. De Blasio further responded to news from Crain's columnist Greg David that lenders are increasingly reluctant to provide funds to owners of regulated buildings, meaning that upkeep could fall off and the city's 1 million regulated apartments could atrophy.

"We also have to make sure, as with any law, if there's any other effects, you know, expected or unexpected, we have to deal with them," he said. "All of us want to see buildings kept up well. So, obviously, this is something we've got to analyze and decide where to go from there."

Nonetheless, de Blasio maintained it was "absolutely necessary to have major strengthening of our rent regulations," and described the law's overall impact as "very positive."

Crain’s New York Business is the trusted voice of the New York business community—connecting businesses across the five boroughs by providing analysis and opinion on how to navigate New York’s complex business and political landscape.